Regional funding up for changes

The call from Peter Straub, the Committee of the Regions president, for better targeting of regional funds (‘Room for improvement in regional funds’, by Martin Banks, European Voice, 27 January – 2 January) is to be applauded. But the required improvements entail a more fundamental change of funding rules and priorities.

In terms of the rules, more checks on the operation of the funds and more transparency are needed. Before money is disbursed, proper needs assessments, cost-benefit analyses and environmental impact assessments must be carefully carried out in order to avoid costly, inefficient or damaging investments. Financing must be rejected for projects that breach the rules. This has not been the case thus far. The Prague-Dresden and Sofia-Pernik motorways, for example, were recently given the green light despite legal infringements and the availability of shorter or cheaper and more environmentally friendly alternative routes.

Citizens and non-governmental organisations must be given a greater say in the use of the funds to offset the disproportionate influence of construction lobbies gearing up to profit from the billions in the EU coffers. Otherwise taxpayers’ money will be spent on economically reckless and environmentally damaging mega-projects such as the planned Danube-Oder-Elbe waterway and exorbitant, unnecessary motorway construction. The enlarged EU should learn from the failure of money transfers after Germany’s reunification – the billions spent in the eastern Länder mainly on road building completely failed to produce convergence with the West, partly due to the ‘acceleration law’ specially enacted to speed up the process by limiting public participation.

As for the funding priorities, these need to be radically shifted to promote efficiency. Across central and eastern Europe (CEE), where energy use per unit of gross domestic product (GDP) is twice as high as in the old member states, the funds could help secure massive energy savings and efficiency gains in the CEE region. In the waste sector, recycling and waste reduction projects are cheaper and provide more jobs in comparison with landfill and incineration. Equally, increased funding for education and training would bring clear economic benefits. In order to create the knowledge-based economy that the Lisbon Strategy is demanding, the EU needs to invest in human brains rather than in concrete.

Like many other regional policy actors at present, Straub is fighting for a higher cap on the EU budget. Rightly so, since if the budget is capped at 1% of EU GDP there may be little left of the regional funds. But unless there is a major improvement in the rules and funding priorities to prevent the misallocation of taxpayers’ money, it is going to be difficult to persuade the net contributors to stump up more cash in the first place.